Saudi halts Motiva oil shipments

Riyadh, June 22, 2012

Saudi Arabia has halted crude oil deliveries to the newly expanded portion of Motiva's Port Arthur, Texas refinery after a massive crude oil unit was shut down for months due to corrosion problems, an industry source said.

Shipments of crude will be stopped until the middle of July, the source said, after which a restart will be evaluated based on the status of the refinery, which became the biggest in the United States following a $10 billion expansion. Motiva is a joint venture of Saudi Aramco and Royal Dutch Shell.

The supply halt follows the first public confirmation of the severity of the problems at the plant's new 325,000-barrels-per-day (bpd) crude distillation unit (CDU), commissioned just weeks ago.

A Shell spokesman said on Wednesday that the unit could be closed for 'several months'. Sources told Reuters that it could be closed for as long as a year.

It was not immediately clear whether deliveries to the 285,000-bpd section of the plant that existed before the five-year expansion would continue to receive shipments.

The new CDU, which began operating in mid-April and was shut in early June, was expected to run solely on Saudi heavy crude for the first two months, company officials had said.

Motiva imported 315,000 bpd of Saudi crude in the first quarter, a 112,000-bpd increase from the year before, according to Reuters calculations based on U.S. government data.

A spokeswoman for Shell, which has been handling queries on behalf of Motiva, said she could not comment on refinery operations or crude oil supplies for 'competitive reasons'.

'However, regarding how this will impact crude supply and making of products, Motiva is well positioned to manage the supply of crude and products and is working effectively with both owners,' the spokeswoman said.-Reuters